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See Hong Kong Before Its Expiration Date (Int'l Edition)

December 01, 1996

International -- Asian Business: HONG KONG

SEE HONG KONG--BEFORE ITS EXPIRATION DATE (int'l edition)

Despite China's promises, tourists are flocking--just in case

See it before it's too late. So think the hordes of tourists descending on Hong Kong before the British crown colony reverts to Chinese control on July 1, 1997. Not that the city will be visibly different on that date. It's just that people want to see the freewheeling territory--just in case China does something drastic to it. "There are lots of places in the world we want to visit," says Judith Asghar, a 33-year-old doctor from Glasgow, Scotland. "We felt this was the only place that couldn't wait."

Arrivals have jumped by double digits for the year, and hotel rooms are getting scarce. For the first eight months of 1996, 16% more tourists arrived than a year ago. Adding to the congestion, business people are also coming to cement deals. "There's definitely been a surge in businessmen," says Michael Horsburgh, general manager of the Holiday Inn Golden Mile in Kowloon.

HOTEL SHORTAGE. The biggest increase is in visitors from Japan, up 41%. "Many Japanese think Hong Kong will be different" after 1997, says Yasushi Yoneda, sales director at Orient Network Ltd., who expects to handle twice as many Japanese tourists this year. Emiko Kondo, a Japanese housewife visiting the colony, doesn't trust Beijing's pledges to keep Hong Kong the same. She thinks it will deteriorate into just another shabby city. "Maybe more poor people will come in from the mainland," she says.

Coinciding with the increase in arrivals is a shortage of hotel rooms. Occupancy rates are currently 87%, compared with 83% in 1995, with rates up 11%. Top-tier hotels report gross operating profits near 50%. Hong Kong has fewer rooms available than at any other time since 1992. The Hong Kong Hilton closed a year ago to make way for a huge downtown office tower, and several other hotels have closed or switched to short-term apartment rentals. The result is a 1,000-room decline in availability, to just over 33,000. The government has made zoning changes to boost hotel construction. But no significant increase is expected until 1998.

Hotel and tourism officials say visitors will still come to Chinese-ruled Hong Kong. They point to the scheduled opening of a large new airport to replace overcrowded Kai Tak, which will increase inbound flights. And the contracts being signed now will have to be executed later. "People will still have businesses to run," says Horsburgh.

Moreover, more people will come from China, now the biggest source of visitors. Arrivals are up 7.3% so far this year. "They want to take a look and see what they're taking over," quips Ian Perkin, Hong Kong General Chamber of Commerce chief economist.

At attractions such as the Peak Tram, tour buses regularly unload groups from southern China's Guangdong province, where incomes are up and more people are traveling. A twentysomething Guangdong native, who gave her name as Miss Tang, traveled to the top of Victoria Peak in early November to view the city Beijing will rule in less than eight months. "Hong Kong is part of China," she says. "Chinese ought to come here." The question is how many from the rest of the world will come too, after July 1.By Bruce Einhorn in Hong Kong